Grand Lodge, A. O. U. W. v. City of Bottineau

• Decision Date: 31 October 1929
• Docket Number: No. 5566.,5566.
• Parties: GRAND LODGE, A. O. U. W., v. CITY OF BOTTINEAU.
• Court: North Dakota Supreme Court

58 N.D. 740

227 N.W. 363

GRAND LODGE, A. O. U. W.,

v.CITY OF BOTTINEAU.

No. 5566.

Supreme Court of North Dakota.

Oct. 31, 1929.

Syllabus by the Court.

A municipality, issuing special assessment warrants in payment of public improvements made, is required under section 3735, Comp. Laws 1913, when any of the property assessed is sold for a delinquent special assessment, in the absence of other bidders, to have the property struck off to the city, and a neglect or failure to do so is negligence.

Where a municipality issues warrants in payment of a public improvement payable from a special fund to be created by an assessment of the property benefited, and the municipality fails or neglects to comply with any of the requirements of the statute authorizing the improvement, so that the assessments become uncollectible, it is liable in damages for the amount due on the warrants, regardless of the value of the property assessed, though the warrants are drawn upon a special fund to be created by the collection of such special assessments, and provide against personal liability of the city.

Appeal from District Court, Bottineau County; G. Grimson, Judge.

Action by the Grand Lodge of the Ancient Order of United Workmen of North Dakota against the City of Bottineau. Judgment of dismissal, and plaintiff appeals. Reversed and judgment ordered for plaintiff.L. J. Palda, Jr., C. E. Brace, and Robert W. Palda, all of Minot, for appellant.

W. H. Adams, of Bottineau, for respondent.

ENGLERT, District Judge.

The defendant is a municipal corporation. In 1910, it constructed extensive sewer and waterworks systems. The city paid for those improvements by the issuance of special assessment warrants. The warrants were drawn upon a special fund, to be created by the collection of special assessments levied against the property benefited by the improvements. The improvements were regularly constructed, and accepted under contract properly entered into between the city and the contractor, and the warrants were duly issued in payment thereof. The special assessment commission assessed the lots improved according to the benefits derived, and the special assessment taxes have been annually certified by the city auditor to the county auditor.

On some of the lots thus improved, the general taxes and special assessments were not paid, since the completion of the sewer and waterworks systems in 1910. The lots were offered for sale for nonpayment of general taxes, and the special assessments. At the delinquent general and special assessment tax sales there were no bidders, and the property was sold to Bottineau county for both the general and special taxes.

The plaintiff is the owner and holder of $10,028.20 worth of those warrants that were not paid by the special assessments. Of those that remain unpaid, $5,528.20 worth are water main warrants, issued in 1910, and were due and payable April 15, 1920, bearing 7 per cent. interest to date of maturity, and $4,500 worth are sewer warrants, issued in 1910, and became due April 15, 1923, bearing 7 per cent. interest to their due dates. The interest upon these warrants was fully paid to maturity by the city. On their due dates, the warrants were presented for payment, and were not paid for want of funds.

The plaintiff brought this action to recover from the city of Bottineau the sum of $10,028.20 for nonpayment of the said warrants, with 7 per cent. interest from and after their maturity. It alleges that the defendant was negligent in not bidding in or having the property struck off to it at the delinquent special assessment tax sale, and, because of such negligence, the defendant became personally liable to the plaintiff in the amount of the warrants.

The defendant answered, denying that its failure to bid in the property amounted to negligence, and, if it did, that the plaintiff was in no way damaged thereby.

The case was tried to the court below without a jury. The trial court decided the issues in favor of the defendant, and entered judgment dismissing the action. The plaintiff appealed to this court.

The facts are stipulated, and, in addition thereto, the defendant presented affidavits as to the value of the lots assessed and sold for nonpayment of the general and special taxes. From the facts stipulated, and affidavits submitted, the controversy presents two questions of law: (1) Was the city negligent in not bidding in or having the lots struck off to it at the delinquent special assessment tax sale? (2) If so, can the plaintiff recover, regardless of the value of the property assessed?

It is a matter of common knowledge that most cities and towns are heavily in debt, aside from various kinds of warrants made payable out of special assessment funds. On the other hand, the acceptor of warrants, given in payment of improvements actually made and completed according to contract, is entitled to know whether a municipality is in duty bound to carry out the plain provisions of the statute under which the warrants were issued, or will be generally liable for neglecting to do so. The questions presented are, therefore, of paramount importance.

[1] 1. Was the city negligent in not bidding in or having the lots struck off to it at the delinquent special assessment tax sale? The statute which authorizes the special improvements, and the issuing of warrants in payment thereof, forms a part of the contract under which the work is done and the warrants accepted. Bankers' Trust & Savings Bank v. Village of Anamoose, 51 N. D. 596, 200 N. W. 103, 105;City of Cincinnati v. Public Utilities Commission, 98 Ohio St. 320, 121 N. E. 688, 3 A. L. R. 705; 6 R. C. L. 325; Lovell v. City of St. Paul, 10 Minn. 290 (Gil. 229).

It is not necessary to set forth more of the statute than directly bears upon the points in controversy here. Section 3735, Comp. Laws, 1913, provides: “Whenever any parcel of land shall be offered for sale for a special assessment, as provided in section 3733, and there shall be no bidder therefor, the county auditor shall strike off such parcel of land to the city, making such assessment, and issue a certificate of sale therefor to such city, which certificate shall be assignable as hereinafter provided, and, if no redemption be made from such sale, or such certificate be not assigned within three years from the date of such certificate of sale, the piece or parcel of land so bid off shall become the absolute property of the city at the expiration of said three years, without any further act upon its part, and may be disposed of by the city at public or private sale, as may be provided by the city council and the city may redeem any parcel of land from a purchaser thereof under a sale for general taxes as is hereinbefore provided for such redemption in other cases, and any assignee of the city's certificate of sale may likewise, and in like manner redeem any such parcel of land from any such sale for delinquent general taxes, and such redemption shall have the same force and effect as provided in the two preceding sections. The city may at any time before its title to said land becomes absolute, by resolution of the city council, assign said certificate of sale to any person except the city auditor and city treasurer, their deputies and clerks, who shall pay the amount for which the same shall have been bid in, and the amount of all subsequent special assessments thereon then due, and all penalties, interest and costs upon the same, and the city auditor shall thereupon execute to the purchaser of such certificate of sale an assignment thereof, substantially as provided in section 1588.”

It is true that a municipality is not generally liable upon warrants payable out of a special fund, if such fund does not exist, and even though it cannot be created, so long as the city is not negligent in the matter or commits no breach of duty. The principle thus stated is a well-established rule. This court has had occasion, in Bankers' Trust & Savings Bank v. Village of Anamoose, supra, to apply that rule. In that case, an action was brought to recover on special assessment warrants. At the delinquent general and special tax sales of the properties they were sold, in the absence of other bidders therefor, to the county and city, respectively. To a large extent, at the time of the action, those properties remained unredeemed, and unsold to private purchasers by the county and city. The city was, therefore, unable to pay the warrants. The court said: “The transaction was purely contractual, and the city, having done all that it contracted to do, without fault or neglect on its part, cannot now be held liable.”

It will be noted that section 3735, supra, requires that when a lot is sold for a delinquent special assessment, and there are no bidders, it shall be struck off to the city. Independent of such a statute, a municipality is not in duty bound to bid in the property sold for nonpayment of special assessment taxes. City of New Albany v. Sweeney, 13 Ind. 245;Creighton v. City of Toledo, 18 Ohio St. 447;Richardson v. City of Brooklyn, 34 Barb. (N. Y.) 569.

The warrants in question stated on their face the purpose for which they were issued, the fund from which they were payable, and provided against general liability of the city. But such contractual restrictions do not save the city from personal liability for its negligence or breach of duty.

Page and Jones, on Taxation by Assessment, vol. 2, § 1511, says: “If the city neglects to collect an assessment which it is bound to collect for the benefit of the contractor, it is liable personally therefor, even if there are contractual, or statutory, provisions against a personal liability of the city.”

The decided weight of authority is to the effect that a municipality may become personally liable for any unreasonable delay, or breach of duty, due to its fault or negligence, in levying, confirming, or collecting special assessments, or...